Thursday, April 8, 2010

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EDITOR’S NOTE:The Independent now finds itself embroiled in a contract dispute between editor-in-chief and minority owner Marianne Partridge against publisher and majority owner Randy Campbell. The outcome of this conflict could well determine the future ownership structure of The Independent in the years to come. When Partridge first filed her initial complaint against Campbell this February, we covered that, and sought out Campbell’s reaction. He issued a brief comment, which we reported, but otherwise Campbell declined to elaborate. Last month, when Judge Denise De Bellefeuile ruled in Partridge’s favor during a preliminary legal skirmish, we reported that too. What we failed to cover in between were the arguments that Campbell and his attorneys provided in their responding papers. Although we alluded to some of these arguments in article on DeBellefeuille’s ruling, the focus of that was the judge’s opinion, not that of Campbell or his attorneys. As such, The Independent’s coverage of its own internal struggle has been somewhat one-sided. So in an admittedly awkward, after-the-fact effort in filling the gap, we are publishing this article to explain Campbell’s allegations. In the future, we will not continue reporting this dispute in the traditional manner, but rather present readers with links to the relevant court documents themselves. Additionally, the comment function for articles related to this lawsuit have been disabled. As a relatively small and tight-knit company, we feel unable to objectively monitor and police comments related to this situation, and have determined that this is the most neutral policy.

Randy Campbell, publisher and majority owner of The Santa Barbara Independent, filed legal papers in mid-March that alleged Independent editor-in-chief and minority owner Marianne Partridge intentionally withheld and “throttled” information vital to Campbell, as well as the other two minority partners, in her effort to force Campbell to sell her his shares of the paper, which amount to 51 percent. Campbell complained that Partridge’s behavior has been “willfull, oppressive, fraudulent and malicious,” and as such is seeking punitive damages against her.

Since last November, Partridge and Campbell have been engaged in a contract dispute involving the sale of Campbell’s shares of The Independent. That’s when Campbell announced he intended to sell his 51 percent for $1.37 million to Southland Publishing, which owns four newspapers, three monthly magazines, and is also connected to Valley Printers, which prints The Independent.

Partridge contended in legal papers of her own, filed in February, that she was contractually entitled to match the Southland offer under the terms of The Independent’s ownership agreement, which dates back to 1986. When she sought to exercise that right, Partridge contended, Campbell has refused to sell her his shares to her, thereby violating the agreement. She has sued Campbell to force him to sell.

But Campbell is countering that Partridge has been premature in seeking to exercise her right of first refusal and that she knows this. First, he claimes, Southland explicitly wrote that its offer was not final. But most importantly, he argued, Southland was seeking to buy out 100 percent of the shares. The deal on the table, Campbell claimed, was always the Southland offer, not Campbell’s. Campbell contended that minority share-holder Richard Parker — who has also joined with Partridge in seeking to buy out Campbell’s shares — had objected at the time that the terms of the deal were not final. Based on that understanding, Campbell said he himself had become disenchanted with Southland’s terms and had hoped to seek a more advantageous deal. Specifically, he sought — and obtained — a commitment from Southland to pay him a salary of $110,000 a year for three years.

Partridge has claimed that once the Southland offer was in play, Campbell could not seek better terms, nor could he opt not to sell if she could match the Southland price. She did, but Campbell declined to accept the check or tender his shares.

Campbell contended that Partridge has withheld information from him and the two other minority partners — Richard Parker and Richard Grand-Jean. He also claimed that Partridge has persisted in claiming that The Independent corporate board declined to match the Southland, when in fact, the board, voted, according to Campbell, to reject the Southland offer. While the significance of the difference may appear obscure, it is pivotal in determining whether Partridge was — or was not — entitled to exercise her right of first refusal. Campbell charged that Partridge refused to provide minutes of the pertinent meetings, even though that is her function as board secretary. “Plaintiff [Partridge] carefully and selectively chose what information was contained in ‘notices’ she prepared purportedly on ‘behalf’ of the Independent. She also kept from Campbell information vital to the transactions. The throttling of information by Plaintiff was designed to bolster her position, with total disregard to her duties to the Independent.”

While the main dispute between Campbell and Partridge remains unresolved, the merits of the case were argued before Judge Denise DeBellefeuille in an ancillary legal maneuver. Partridge sought a restraining order preventing Campbell from disposing of his stock in any manner pending the outcome of their show-down. DeBellefeuille found in favor of Partridge. In order to rule as she did, DeBellefeuille had to first make the finding that Partridge had demonstrated that she would likely prevail if and when the matter ever went to trial. The judge ruled that Partridge had done so. At this point, the parties enter the slow-motion dance of taking depositions and gathering information.

Below are links to all of the relevant documents pertaining to this lawsuit.

[EDITOR’S NOTE: The comment function for articles related to The Independent’s ongoing internal lawsuit have been disabled. As a relatively small and tight-knit company, we feel unable to objectively monitor and police comments related to this situation, and have determined that this is the most neu